Have you ever thought what you would do if you won the lottery? You may think that having millions of pounds at your disposal would solve all your problems – but beware. Unfortunately, many past lottery winners have had to learn the hard way that even untold riches can’t buy you happiness.
Should you be lucky enough to find yourself with a windfall win, it is absolutely essential that you take professional financial advice to ensure that you make the most of your new found wealth. I spoke to Jon Baggot, Managing Director of Numeric Accounting in Salisbury about the most common mistakes you must avoid.
Going public without careful consideration
The majority of jackpot winners – four out of five in the UK – choose not to go public. The decision really does need to be thought through very carefully though as there are pros and cons to both privacy and publicity. If you go public you are opening yourself up to potential press intrusion and, of course, begging letters from all and sundry. On the other hand, keeping such a big win a secret can be equally stressful – it’s almost impossible to become a multi-millionaire overnight and keep it to yourself or just family and close friends.
Not taking immediate control of your win
You will likely be stunned, shocked and elated all at once and it will be tempting to think that now you are rich beyond your wildest dreams, other people will take care of things for you. This is a big mistake and one that leaves you open to manipulation and exploitation. You need to keep your sensible head on and assume control of your new found wealth from day one. You alone are responsible for your decisions and their consequences.
Saying yes to every request
It’s not just the begging letters from strangers you need to beware of – your friends and family will likely have plenty of good ideas about how to spend your win too. Of course, you will want to take care of and treat your nearest and dearest but take time to think it through. It is important to plan and prioritise what you most want to do for others. You are also likely to be inundated with family and friends’ sudden brilliant business schemes which just need a bit of investment to get off the ground. Again, take time to investigate their viability before deciding whether to invest.
Immediately quitting your job
Tempting as it may be to march into your boss’s office on Monday morning and tell her where she can stick her job, this is not a wise move. It is much better to make a gradual transition into your new life and being rich is not an excuse to suddenly behave rudely and unprofessionally. A surprising number of winners choose to carry on working – they understand the important role a job can play in your life, keeping you grounded in reality and not losing sight of the true value of money.
Spend, spend, spend
Just because you have millions in the bank, it doesn’t mean you don’t have to worry about doing a budget any more. In fact, it is more important than ever as you will now have to do an even bigger budget. We’ve all read the stories about the jackpot winners who blew the lot within a couple of years – don’t let that be you. Plan every penny and your future really will be secure.
Deciding you don’t need a financial advisor
Apart from blowing the lot on a massive bender, refusing professional advice is probably the silliest thing you can do. Hiring an advisor who is experienced in helping people with large fortunes is a great investment in ensuring your millions work well for your needs. Don’t forget that you will have to pay tax on your savings and investments and an advisor will be able to help you work out the best way to take care of this.
Carrying on as normal
Staying in your old home and job might be a good idea to keep you grounded in reality in the long run, but in the short term you will probably need to take a break. Yes, a big win is fantastic news, but any life-changing event is potentially stressful – and this is probably the biggest single change in circumstances you will ever have faced. It is a good idea to take a holiday if you can, putting a breathing space between your old and new life and giving you the chance to recover from the initial shock and euphoria.
Leaving debts in place
Paying off what you owe should be one of the first things you do. It might feel like it doesn’t really matter now that you are rich, but no one knows what is around the next corner. If you end up losing everything, at least you won’t still have mortgages and other debts hanging over you. And you’re going to look pretty silly if you do!
Forgetting who you are
All the old clichés – “money can’t buy you happiness”, “never forget where you came from”, etc – are clichés for a good reason: they are true! A lottery win will certainly change your life, but it won’t change the core of who you are as a person. Just because you are wearing beautiful new clothes and driving an expensive car doesn’t mean you are no longer you. Stay true to your principles and values, don’t forget about the people you love and you can’t go far wrong.
Giving it all away
Yes, it happens. It might sound mad, but some jackpot winners throw their entire win at their favourite charity. You can be generous with your win without doing something this drastic. It might feel fantastic to help those in need, but just imagine how you would feel in the future if a family member became ill or destitute and you could have helped them – you’d likely never forgive yourself.